Month: April 2006

Time to re-learn some French. Ina, the French Institut National de l’Audiovisuel, is following the lead of the Beeb and opening up their archives. You’ll find about 10.000 hours of programming, either for free or some rather modest fees in the 1 EUR range (so the French are topping the Brits here on a massive scale).

What’s happening here is the re-definition of pubcasting. Way back, they started with black and white transmissions to funny looking wooden tv furniture. Now they’re reinventing themselves into public service content and asset players.

Still missing in this game are unfortunately the players with the deepest pockets. ARD and ZDF, the German pubcasters, prefer to sponsor digital terrestrial TV. Pubcasting on VHF and UHF? That’s the future (of 1963).

There’s a good exchange going on between John Hagel and Umair Haque and a couple of other guys. By putting Lost and Desperate Housewives, is ABC/Disney close to finding the holy grail of digital distribution (as Fred Wilson seems to believe) – or is making exactly the wrong move.
So what’s happening here? With putting some successful shows online, Disney as a copyright holder is most likely generating some additional pocket money. That’s just fine.

Same for ABC as the traditional distributor (AKA tv network): some incremental income from some top shows. Makes sense, too.

Of course, Disney/ABC won’t get any multiples in valuation out of that. Producing content isn’t a scalable business model. Bundling, or – as Umair likes to call it: rebundling is. Rebundling is where value capture will happen – at communities, reconstructors, markets, networks – that direct people’s attention to individualized ‘casts. This is where branding will be reborn – and where advertising is already being disrupted, ripped apart, and reborn (viz, Google, PPC, pay per call, etc)
Yes, right. Google’s a good example. It’s an ad sales giant with an attached search engine. Which is either a good example that directing people’s attention to individualized ‘casts is either a phantastic business. Or a nice way of telling you that the value creation spot at this end of the value chain is already taken. (It’s getting scary if you look at MySpace. More users than a medium sized country, more pageviews than sand on mars. And Appalachian thrift store-CPMs. Is there a cure for this? That’s going to be an interesting question for News Corp.)

Hagel’s approach is a bit more sober. Now, there is nothing wrong with remaining a product business in the media industry. If you come up with compelling and engaging products (content), you will still own a profitable business. You may even attract a loyal audience. But the challenge will be to build a scalable and sustainable business. In a world of intensifying competition and proliferating options, that is going to get harder and harder. In most cases, audience “loyalty” is only as good as the most recent product issued.

In contrast, audience relationship businesses take these proliferating content options as an opportunity, rather than a challenge. The more options there are, the more value that can be created by organizing, packaging, presenting and adding to these options for specific audiences. Itâ€™s a completely different mindset, skill set, culture and economics.

Straight consultant thinking. But in any product business, loyalty is tied to your most recent product. It’s more a question of product life cycles. Designing and producing a car is a 25 years effort (including the after sales market). Media is about 5 minutes of fame. That’s why brands like Oldsmobile can experience quarter of a century long near death experiences. Media products die much quicker (anybody remembers The Sweet?).
Audience relationship is definitely a right angle. And from a consistency of performance perspective, the quantity of options to be matched with a as big as possible consumer base makes perfect sense. But the real power
of media and media production is the chance of hitting upon the perpetuum mobile of inherent brand building.

No media buying involved. You ARE the media (at least, if you keep all those necessary rights, handle distribution well …) In those cases, audience relationship building isn’t about matching and hedging. It’s about product-defined relationships, delivering emotional frameworks for people to live with.

Cellphone companies like Sprint, Verizon Wireless ad Vodafone, have been aggressively promoting mobile video services, which cost an average of $10.70 a month for access to sports, news and weather clips. More than a quarter of cellphones now in use can play such videos. But only 1 percent of wireless subscribers are using their phones to watch them, according to a recent survey by the NPD Group, a market research firm.

The good news is: No problem, probably about the same amount of people talk on a regular basis to their tv sets. Which might not qualify as making a phone call. But watching a sports event on matchbox sized screen ain’t television either …

No, really: broadcasting to handsets via mobile phone networks is a weird idea anyway. It’s either a failure – or punished with network congestion. Mobile broadcasting via DVB-H or DMB makes at least some technological sense. But building the infrastructure is scariliy expensive.

Mobile media is personal media: portable radios are on the shelves since more than 40 years. But Walkmen and iPod are dominating the streets for a reason, not dirt cheap FM receivers. Data storage is getting less and less expensive. And that at much quicker pace than bandwith pricing. So yes, mobile video is a runner. But mobile tv – a bummer.

Is IPTV real TV or something else? If you think, that’s a highly hypothetical question, you’re not following in the recent dealings and wheelings of Deutsche Telekom and DFL, the German Soccer League.

The dry facts. DFL sold the Pay TV and Free TV rights to the German Soccer League for a whopping 220 Million Euros per season to Arena, a subsidiary of a larger German MSO. Pay TV provider Premiere, for the last umpteenth years the single source of major league live soccer, got snubbed (and a decent rubbing on the stock market).

Meanwhile, Deutsche Telekom got an other asset from DFL. The Internet rights. So far, so good. But now it seems, DFL oversold a bit. Arena is claiming to have some IPTV rights, too – as long as they just stream their productions. And at the same time, Deutsche Telekom seems to have some plans with Premiere. Which, depending on the exegesis of the contracts, might reach pretty far. Just imagine something like an encrypted IP datastream, broadcasted via satellite to a tv settop box.
Seems like, DFL underestimated the power of the IP protocol. Obviously, DT wasn’t interested in paying 45 Million Euros for some PC based geek TV. What they’re already selling is a 49 Euro settop box for bringing IP-based VoD movies onto your tv set. The next step (coming this fall and this soccer season) is some real IPTV, based upon Microsoft’s tv foundation. Essentially, it’s a virtual overbuild (if you’re a cable MSO). Essentially, its tv++ (if you’re interested in the tv dimension of the technology). Essentially, it’s a heavyweight’s muscle play. In Europe, for defending the voice and high speed data access market. (For US carriers, it’s about securing voice and gaining on data.)

For rights holders, this means interesting times. Because new money is flooding into the market. But be aware. First thing: For the telco giants, premium content is merely a marketing expense, not a crucial business affair. A couple of years ago, the music industry saw mobile operators as the digital white knight. Until they realized something quite frightening: the EBITDA of a carrier like Vodafone equals the annual turnover of the wole global music industry. Ooops.
And as the DFL example shows: going digital means, that your traditional licensing models are going down the drain. Selling tv and online rights doesn’t make any sense anymore, if your tv has online access. We’ll have to find different ways to differentiate. Screen resolution might be a way to go here.

Mark Glaser of PBS’ MediaShift did a short interview with Chad Hurley, CEO and co-founder of YouTube. The timing couldn’t have been better. The next day, YouTube received another 8 Million USD in VC capital.

But seriously. YouTube, built as some sorts of Flickr for Videos, is most likely the best thing what could happen to video on the web. Think about it: streaming video is around since 19hundred umpteen. And nobody did ever really care. Why? Let’s start with the user experience. Proprietary players which had to be started before they started buffering the video. One of the worst offenders: Microsoft’s Windows Media Player, an unwieldy chunk of counter-intuitive interface design. With Real coming in as a close second in the jack of all media-trades category. And Apple killed of any love for QuickTime with their constant Windows nagging screens.

Secondly, serving video always came with a hefty price tag attached. Even if you didn’t need any expensive server software to get the video files out. The fastest thing to kill your business hass been: success. Serving one video is fine. Serving a million is still a major head ache. If you don’t put your stuff on sites like YouTube, Google Video, vSocial, Veoh.
What those guys achieved, Glaser puts it in the right words: There is a simple truth about video-sharing site YouTube, and an enigma. The simple truth is that this web startup has bottled up the viral video idea and made it eminently drinkable by anyone.

But what’s the enigma? It’s how YouTube will profit on its own spectacular popularity. Yup. Good question. Being VC funded or not, sooner or later you’ll have to make money. The numers are spectacular (35 million videos per day, and users upload 35,000 videos per day, with 100 million page views per day).
So what’s YouTube’s idea to monetize this kind of success?

Hurley’s answer isn’t that clear. It will be an advertising-based model. We are exploring ways to serve up relevant advertising that will benefit the viewing experience since we know a lot about each of the videos based on how they are tagged.

Sounds good. But it’s going to be hard to deliver ion this.

Let’s start with the content. 35,000 uploads a day and a staff of 23 means: It’s impossible to double check all the posted material. Actually, YouTube is doing a good job in not putting up any porn on the start page. But if you look at the numbers, most viewed means mostly copyrighted material coming out of nowhere.

Probably 90 percent of the images hosted at Flickr are genuine user generated content. Looking at YouTube, you’ll have to define “user generated” a bit laxer. Does recording a tv show snippet and posting it on YouTube already qualify you as a user generating content?

With this premise, selling advertising looks tough to me. Tagging a stolen clip with a paid for ad would definitely be a bad business move. Copyright holder don’t tend to be too amused. And advertisers most likey will shun to become an accessory after the fact.We have been moving cautiously to ensure we donâ€™t disrupt the goodness of the community, says Hurley. But at the end of the day itâ€™s the viewers that decide what is entertaining whether it be user-generated content or professionally produced videos â€” our community is still in control and will decide what rises to the top.

Yes, at the end of the day the users might still decide what’s entertaining. But currently, YouTube et al. aren’t in the business of Flickrization of the web video space. The name of the game is napsterization. Remember: Gazillions of hapyy users. But not even a serveral million Dollar backing of a major media company could save Napster from being sued to death.
Yes, YouTube’s a great service. But, in most likelihood, not a great business model.